Transcript: Dr. Heidi Hartmann on growing reliance on Social Security by American seniors

Dr. Heidi Hartmann outlined the grim financial future facing many older Americans as a result of the 2007-2009 recession and slow economic recovery and how that would lead to a growing reliance on Social Security benefits for seniors.

U.S. Senate Committee on Health, Education, Labor, and Pensions Hearing on the Recession and Older Americans Oct. 18, 2011

Dr. Heidi Hartmann, President of the Institute for Women’s Policy Research & Professor at George Washington University

Dr. Heidi Hartmann, President of the Institute for Women's Policy Research & Professor at George Washington University. PHOTO SOURCE: help.senate.gov

“Good morning, Mr. Chairman. It’s a pleasure to be here, and I thank you for this opportunity to testify.

“In addition, as you’ve said, to being the president of the Institute for Women’s Policy and Research, I am a labor economist with a Ph.D. from Yale University.

“I want to share with you our findings from some recent research, and I would like to acknowledge the support of the Ford Foundation, the Rockefeller Foundation, and the Annie E. Casey Foundation in supporting our work.

“To put it briefly, our study shows seniors have been hit hard by this recession. Their income from assets and pensions has fallen, and they’re trying to make up for that by working more. Fortunately, Social Security is there for them and is making up a larger share of their income at the same time that other sources of income have declined.

“Among all the age groups, only the elderly did not see an increase in poverty during the recession and its aftermath. This income stability is almost certainly a result of the near universality of Social Security and its important protective features, such as its lifetime guarantee and its cost of living adjustments.

“As a result of the recession, more Americans of ages are worried about having enough funds for retirement. Fewer feel they’re saving enough for retirement. Many are borrowing from their retirement funds or withdrawing money from savings to deal with the slow recovery from the recession.

“I am skipping through my testimony. I will be summarizing it.

“The severe loss in assets as a result of the recession should increase policymakers’ concern that those 45 to 59 years old who are beginning to enter retirement now and will continue to do so for the next 20 years will need Social Security benefits even more than the current generation of retirees.

“These older workers are also experiencing disproportionate share of long-term unemployment. Therefore, programs that create jobs such as the American Jobs Act are especially important to them. As we’ve just heard from the poignant testimony of Mrs. Ruggles, the assistance with job training and finding employment is also critically important as is continued long-term unemployment insurance benefits.

“I would like to illustrate some of the major points of our research.

“First, older Americans are relying more on Social Security. In the full testimony with all the figures, figure 2.5 shows that income for women from all sources is lower than men’s income and that women therefore rely more on Social Security than men do.

GRAPHIC SOURCE: Written testimony of Dr. Heidi Hartmann

“This graph, which is figure 6 in the testimony, show that for all women 65 and older the share relying on Social Security for 80% or more of their income has grown 4% since 1999 to 50%. In other words, half of all women 65 and over are getting 80% or more of their income from Social Security. For men, the increase has been even greater in this recession and recovery period. Since 1999, the share of men 65 and older who are relying on Social Security for 80% or more of their income has grown by 6%, from 29% to 35%. So that’s more than one-third of all men who are now relying on Social Security for more than 80% of their income.

“The period from 1999 to 2009 of course included two recessions – the 2001 recession -and the GAO testified or mentioned that at the start of the second recession older people were not in a great position in terms of their assets because most Americans never really recovered from the 2001 recession before this much bigger recession hit in 2007.

“We have another graph in the full testimony that shows that the older old rely more on Social Security than the younger old and also that minorities rely on Social Security more for larger shares of their income than do whites.

“Second, I would like to point out in the next graph something that the GAO also mentioned that Social Security has been remarkably successful in this recession in preventing the poverty rates for older Americans from going up. As you can see in the green line, those Americans 65 and older, their poverty rates fell from 2007 and 2010. But you can also see that the age group characterized by Ms. Ruggles for them the poverty went up for those 60 to 64, that’s the blue line. Their poverty increased during the recession. Especially for those 55 to 59, the red line, their poverty rate steadily increased during the four years of the recession and recovery. This reflects the fact that they are still a largely in the labor force, and the labor force is still not providing the jobs. Again, the rising poverty rates reflects the difficulties that older workers are having in the labor market, and it shows how important it is to create jobs and to provide job training for this age group.

“Third, I want to share some findings from a survey we did of 2,700 Americans – the next chart – and just looking at how people believe they will or will not have adequate savings to maintain their standard of living in retirement. We asked them to compare their view of that now to what they held before the recession and the drops in the confidence that their savings will be enough to maintain their standard of living are amazing. For example, for women ages 45 to 59, in the blue lines, showing a severe drop, 52% before the recession thought their savings were adequate; now only 25% do. And once again, women have less confidence than men and a greater drop in confidence as a result of this recession.

“Once again, this age group is an age group that’s at a severe risk, and therefore I think I would just conclude with the notion that these programs such as described that Ms. Ruggles was able to take advantage of are extremely important to continue. If we are going to prevent poverty from increasing as this generation retires, we have to do something now to strengthen their employment opportunities and their abilities to save and build for their retirement. Thank you very much.”